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FHA.com is a private company, is not a government agency, and does not make loans.

Discount Points

Related Terms: Points, Loan Discount Fee

Also called points, discount points work as pre-paid interest on your loan and help to lower your overall interest rate. A discount point is an upfront payment made during the closing stage of a mortgage transaction.

A point amounts for 1% of the total mortgage, and generally lowers your interest rate by .25%. It is also tax deductible for the year that it was paid.

You as the borrower, will see an advantage in paying discount points with the benefit of lowered interest rates. However, keep in mind that it’s important to see the loan through to the end in order to benefit from the decreased monthly payments and make up for the cost of the points.

Lenders also benefit from this since they get money upfront instead of waiting for monthly interest payments. It also means that if you default on the loan, they don’t suffer as much of a loss.

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FHA.com Reviews

FHA.com is a one-stop resource for homebuyers who want to make the best decisions when it comes to their mortgage. With our detailed, mobile-friendly site, individuals can access information about different FHA products, the latest loan limits, and numerous other resources to make their homebuying experience easier. Take a look at some of the reviews from other FHA.com visitors!

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